India’s-labour-participation-rate
Editorial Notes

[Editorial Notes] Surveying India’s unemployment numbers

India’s labour participation rate is very low by world standards and that even this low participation rate fell very sharply after demonetisation.
By IASToppers' Editorial Board
March 19, 2019

Surveying India’s unemployment numbers

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Context:

The Centre for Monitoring India Economy (CMIE), a private enterprise, has demonstrated in its household survey, called the Consumer Pyramids Household Survey (CPHS) that India’s labour participation rate, very low by world standards, fell sharply after demonetisation.

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Opinion:

About the survey:

  • The CMIE’s CPHS thus has a much larger sample and is conducted at a much higher frequency than the NSSO’s.
  • A difference between the CPHS and the NSSO surveys is the reference period of the employment status of a respondent. While the NSSO tries to capture the status for an entire year and for a week, the CPHS captures the status as on the day of the survey.
  • Further, the CPHS is conducted as face-to-face interviews necessarily using GPS-enabled smartphones or tablets.

Highlights of the survey:

  • India’s labour participation rate is very low by world standards and that even this low participation rate fell very sharply after demonetisation.
  • In the aftermath of demonetisation, the unemployed heated badly in comparison of employed who lost jobs.
  • There was an exodus of the unemployed from the labour markets which is the real reason for a fall in the labour participation rate.
  • Specifically, India’s female labour participation rate is very low and falling.
  • As per the survey report, the entire brunt of demonetisation was borne by women. Their labour participation fell sharply while that of men did not.
  • After the introduction of the Goods and Services Tax, small enterprises which could not compete in a tax-compliant environment drove away from business. This caused a substantial loss of jobs.

Reasons for low female labour participation:

Researchers have shown that this fall is because of

  • Rising household incomes that reduce the need for women to join the labour force;
  • Increased enrolment in higher education by women which delays their entry into the labour force,
  • Cultural and security factors that keep women away from the labour market in India.
  • Employers are also biased against hiring women.

Key facts:

  • Monthly measurement of the unemployment rate is one of the requirements of the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF).
  • The objective of SDDS is to help countries access the international capital markets by providing adequate economic and financial information publicly.
  • India was one of the early signatories of the SDDS which was established in 1996.
  • India complies with many requirements of the SDDS, but the Government of India does not produce any measure of monthly unemployment rate.
  • The unemployment rate is the ratio of the unemployed to the total labour force.

IT’s Input:

Special Data Dissemination Standard (SDDS):

The Special Data Dissemination Standard (SDDS) was established by the IMF in 1996 to guide members that already had, or that might seek, access to international capital markets in providing key economic and financial data to the public.

Special Data Dissemination Standard (SDDS) iastoppers

  • In the following year, the IMF established the General Data Dissemination Standard (GDDS), which seeks to prepare countries for meeting the requirements of the SDDS.
  • Data supplied by countries subscribing to the SDDS, as well as information provided by countries participating in the GDDS, are posted on the IMF’s Dissemination Standards Bulletin Board (DSBB).
  • Under the SDDS of the IMF, central banks undertake the responsibility of disseminating information under certain data categories, such as, analytical accounts of the banking sector, analytical accounts of the central bank, balance of payments, international reserves and exchange rates. The IMF requires that these data should be available at regular intervals in public domain.
  • It is intended to further the IMF’s initiatives in data transparency and standards, to enhance the public availability of timely and comprehensive international statistics, and therefore to contribute to countries pursuit of sound macroeconomic policies and to the improved functioning of global financial markets.

How it works?

  • The IMF as well as central banks also provides a National Summary Data Page (NSDP) on their websites to provide quick access to a single comprehensive source of economic and financial data consistent with the data categories and components described in the subscriber’s metadata.
  • Additionally, many of the NSDPs include further links to additional data or information on other national Internet data sites.

India and SDDS:

  • The Reserve Bank of India is one of the earliest central bank signatories of SDDS. This section provides the data released by the Reserve Bank of India under SDDS requirements.
[Ref: The Hindu, RBI, IMF]